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John Cofran

 
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  • Market Soars: Now What? [View article]
    Hey, I couldn't agree more. I am secular bearish. I am also an opportunist, so after a 10-20% drop, I expect to find some long-term values. But I agree, we could be in for a 50% drop, I just hope not. That said, we should expect a free fall if Barak is re-elected.

    I was early in on the first leg down, buying in at Dow 10,000. I went in further at S&P 1,000. I went in deeper and deeper as we fell, fortunately maxing out at the very bottom.

    That was a unique period in modern history, but not one that will not be soon repeated. I am remindd of 1929-1933... Fall, bounce, collapse, Great Depression. I expect we have a 55% chance of that repeating today, and 85% chance if Osama is re-elected.
    Sep 8, 2012. 10:04 PM | Likes Like |Link to Comment
  • Market Soars: Now What? [View article]
    That's right. For better or worse, I will never go 100% short US equities. For me, the equivalent will be pulling all my cash out of US accounts, moving to another country and hoping for the best. But yes, I will never go 100% short the US stock market.

    I am long-term hopeful (emphasis on HOPEFUL) on the US, short-term bearish (ST = 2-3 years). That said, I believe momentum reigns and technicals play a role in buy/sell pivot points. Therefore, I do believe we could rally to test 1,570 or more (1,600 maybe), but then look out below...
    Sep 8, 2012. 07:56 PM | Likes Like |Link to Comment
  • Market Soars: Now What? [View article]
    @debrasev, thank you for your kind comment. I would be happy to discuss in detail my dividend strategies. Email me any time at john@cofrancapital.com.

    Regarding your question, my suggestion is that by the time we approach the all-time highs (about +9% from here), investors should be at 50% or less their maximum allocation to equities. Assuming a typical max allocation to equities of 100%, I feel investors will want to be at no more than 50% as we approach 1,570. For investors with a max allocation to equities of 60%, they would trim their exposure to 30% +/-

    That said, everyone's situation is unique, so this advice does not apply as a one size fits all. The strategy recommendation is based on someone who would typically be comfortable 100% invested in equities.

    That said, I generally suggest one allocate no more than 75% of their net worth to equities. The remaining 25% can be in real estate, gold, hard assets, bonds, cash, etc.
    Sep 8, 2012. 02:10 PM | Likes Like |Link to Comment
  • Market Soars: Now What? [View article]
    Volume doesn't concern me over long periods. It could be a secular shift causing the volume declines rather than a short-term technical phenomenon.
    Sep 7, 2012. 09:25 PM | Likes Like |Link to Comment
  • Market Soars: Now What? [View article]
    I agree it is a dangerous time to be long, however, I do not think the recent rally is simply a short squeeze. I do believe most asset managers are behind the eight ball and have much catching up to do, which accounts for some of the buying. Internals are actually quite strong, and the VIX bottoming out contributes to the contrarian view that the market is due (eventually) for a pullback or correction.

    I have no crystal ball, so the pullback could happen tomorrow, or it could happen 5% - 10% up from here.

    In any case, when it happens, I suspect it will be 10% - 20% at least.
    Sep 7, 2012. 03:58 PM | Likes Like |Link to Comment
  • Market Soars: Now What? [View article]
    I am not positioning the entire portfolio short, however I have moved from 130% long to 100% long, and have added a few short positions (PEP) for example. I believe that investors should never move to 100% short, as I have faith in our country/economy over long periods (20 - 50 years). Thus, I go short only to hedge generally. In even the worst environments, I can only see going 50% - 70% cash. Never could I see going to negative market exposure.
    Sep 7, 2012. 03:32 PM | Likes Like |Link to Comment
  • Market Soars: How You Should Position Yourself Into Year End [View instapost]
    It certainly is wise to hold core positions in world class companies. What is not wise is riding those positions up and down, ending up in the same place we started. Market timing is difficult for many, but individual names often fluctuate 10% - 20% each year. It never hurts to lighten up after a 20%+ rally in any blue chip name, or add to positions after a similar fall.

    As we approach all-time highs, it is advisable to trim trading positions, speculative positions and rotate out of high beta names. I also do not like welcoming the tax man in every time I sell a position. So, I use a few basic strategies:

    1. Sell covered calls on core positions, juicing gains and cushioning market pull-backs.

    2. Sell big winners in tax deferred accounts (IRA, SEP, 401k, etc), to lighten up market exposure without triggering a tax event.

    3. Sell losers in taxable accounts, lightening your overall market exposure and providing you a write-off.

    4. Sell losers in taxable accounts and reacquire the position in a tax advantaged account, assuming you still like, and want to maintain a position.

    5. Buy puts to protect positions.

    6. Hedge your portfolio with short positions using either short market ETF's, such as SDS and SSO, or by shorting the SPY.

    7. As you suggest, trip positions around the edges, cutting even core positions by 1/4 to 1/3. Be sure to sell lots with the higest basis to avoid taxable gains.
    Sep 7, 2012. 09:54 AM | Likes Like |Link to Comment
  • BP Prudhoe Bay Royalty Trust's Frenzied Sell-Off Got Me Interested [View article]
    I'm in now through December $70 calls. Seems like a gift from Mr. Market.
    Aug 30, 2012. 09:03 AM | 1 Like Like |Link to Comment
  • 2012 Could Be A Monster Year For The S&P [View article]
    As a quick follow-up to my 2012 S&P Predictive Analysis Article, it appears this year has played out consistent with the historic data. The $SPY (SPY) is up roughly 12.5% through August 17, 2012. We have retested and taken out the 2011 highs and are looking at the all-time highs on the horizon. Having run up as much as we have, further upside is more limited and caution is warranted. While it is possible the rally has another 10% or so to go, long-term I have been predicting we bounce hard off the all-time highs in the S&P. Use caution and lighten up some every 1-2% advance from here. As we approach the all-time highs, I suggest investors be no more than 50% invested in stocks in relation to their typical allocation.
    Aug 18, 2012. 01:47 PM | Likes Like |Link to Comment
  • Minimzing Taxes On REITs: A Look At Capstead Mortgage [View article]
    this description of this strategy is flawed in every way... there is hope for the strategy, but not for or in the way the author describes
    May 18, 2012. 03:31 PM | Likes Like |Link to Comment
  • Short-Term S&P 500 Volatility-Based Probability Price Range [View article]
    Nice analysis. Very helpful.
    May 17, 2012. 10:15 PM | Likes Like |Link to Comment
  • Stocks For Forever [View article]
    don't wait for a change in rates, or you will be too late and lose much of your recent gains

    be ahead of a rate change and be wary of blindsightedness
    May 17, 2012. 03:41 PM | Likes Like |Link to Comment
  • Minimzing Taxes On REITs: A Look At Capstead Mortgage [View article]
    this makes absolutely no sense
    May 17, 2012. 03:38 PM | 1 Like Like |Link to Comment
  • 3 Warning Signs Of An Imminent Dividend Cut [View article]
    PBI is under attack. That said, picking a bottom in a fundamentally weak business is like catching a falling knife. There is a price at which PBI will make you money, but given where the yield is currently, I recommend only as a speculative position in your portfolio.
    May 15, 2012. 11:23 PM | 2 Likes Like |Link to Comment
  • After Historic Q1, Where To From Here? [View article]
    Stocks 1,

    I agree the sample size is small, howevver my analysis, like the Stock Traders Almanac, is just one of many handicapping tools available to form an overall hypothesis.

    Keep in mind, statistical analysis has been useful in handicapping plenty of events with small sample sizes- Superbowls, boxing matches, etc.

    For me, knowing the market has been up April 1 - Dec 31 in 33 of 38 occurrences after an up first quarter, and knowing the market has historically produced outsized gains following a flat year simply aids in my decision to remain 133% invested in the short term.

    Should the year play out consistent with history, I will sell in May (lighten up to 70% invested) and re-enter as we near Q4.

    While this may sound like timing, note I simply aim to buy low and sell high. We have had a great run since October, so paring back based on statistical analysis simply means I will be selling high. I miss a few points, but a 20% year is not bad, and I may be able to pick up another 5 points in Q4.
    Apr 1, 2012. 08:13 AM | 1 Like Like |Link to Comment
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